As if the global auto industry and Volkswagen Group didn’t already have enough brands on the market, the arrival of JETTA for the German automaker and its joint venture FAW-Volkswagen is yet another bold move by the leading foreign automaker in China to tackle the local market in unconventional ways (see From model to brand: JETTA is Volkswagen’s new “people’s car” in China).
As the first sub-brand of the Volkswagen brand and third brand from FAW-Volkswagen, the JETTA, as the title of this issue’s feature story suggests, is essentially the new “people’s car” brand specifically for the Chinese market. It becomes the first brand ever to be born out of a model and carries with it the legacy and reputation of being sturdy and durable, or “pishi” as the Chinese puts it. And it’s not just from any model: the Jetta is the first mass market model introduced by FAW-Volkswagen after the joint venture was established nearly 30 years ago, and has remained one of the bestselling models on the market since then. Last year, more than 300,000 Jettas were sold.
Why then, is Volkswagen transforming the model Jetta to the brand JETTA?
Apparently, Volkswagen as the original “people’s car” is not “people’s car” enough for many young Chinese customers who are buying their car for the first time. The JETTA, according to Volkswagen, will address these people who account for 81 percent of all vehicles sold in China’s entry-level segment, by offering high quality, safety, emotionality, stable value and fresh design. It wants to fill a gap between the established “top of volume” Volkswagen brand and entry-level segment served by Chinese independent brands.
Similar to China-only models like the Lavida, Phideon and Bora, Volkswagen has basically created a China-only brand. It is not the first one to do it but it is the first one to use the name of a familiar model with strong heritage in the market.
What the JETTA will not be is an economy brand. That, according to Volkswagen, is a segment priced in the €5,000-€6,000 range, and the JETTA will be positioned above that, but below the ¥100,000-and-above segment that Volkswagen brand serves.
Will JETTA continue its success after its model to brand transition? Should Chinese brands be worried? The jury is still out on the first question but the answer is definitely no on the second.
For the better part of this past decade, Volkswagen has contemplated in launching a local only brand at one of its joint ventures. The launch of the JETTA brand comes at an interesting time: the market is temporarily tanking after years of growth, but quite a few Chinese brands have already cracked the glass ceiling as far as quality and pricing is concerned and competing with established foreign brands head on. JETTA should not have problem generating significant sales volume but Volkswagen must confront the prospect of cannibalization of its namesake brand and Škoda brand. The JETTA is a Chinese brand with Volkswagen DNA. Its legacy is on the line as it tries to woo younger consumers who are not so brand sensitive/loyal, and who may not even care about sturdiness. �N